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01/17/2022

The Right Choice

Replacing two disparate systems, Choice Hotels teamed up with trusted tech partner IDeaS to create a proprietary revenue management system and won a 2021 Hotel Visionary Award within the Enterprise category for its efforts.
Michal Christine Escobar
Senior Editor (Hotels)
Michal Christine  Escobar  profile picture
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Choice Hotels Logo

As COVID-19 settled in for the long-term, one of the major effects it had on the hospitality industry was to completely disrupt booking curves and pricing. Historical data was no longer useful or accurate, and Choice Hotels recognized that their franchisees needed a new tool to better forecast and understand what a customer was willing to pay.

“Currently, 80 percent of our overall business is booked within 72 hours,” notes Douglas Lisi, vice president of revenue management. “And in our economy hotels, 50 percent of our business is booked the same day.”

So, Choice Hotels decided in 2021 to launch its new revenue management system – ChoiceMAX – to help hoteliers optimize their pricing structure aimed at increasing revenue.

Prior to ChoiceMAX, franchisees were using two systems to manage their rates and inventory, Lisi explains. The first was SmartRates, a proprietary system from SaS based on their RMPOA all-purpose algorithm. That system managed the daily rate that was sent to ChoiceHotels.com, the OTAs and the call center and could only manage rates up to 90 days in advance. Hoteliers also used a product that was built in-house called Rate Center to manage their inventory up to 365 days in advance.

Logging into two systems is a cumbersome way to manage a business,” Lisi explains.

While Smart Rates was allowing hoteliers to manage rates and maximize revenue, the brand was receiving quite a bit of feedback from franchisees that they wanted a revenue optimization tool that could focus on the next 365 days, especially for its Cambria and extended stay brands that have bookings well beyond 90 days and needed a longer-term view. At the same time, it was hearing from its economy and mid-scale brands that they wanted rate pricing to adjust more than just once per day.

New Collaboration, New Product

To solve these challenges, Choice Hotels collaborated with IDeaS, a provider of revenue management and software serves, to create ChoiceMAX.

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Douglas Lisi of Choice Hotels
Douglas Lisi, vice president of revenue management, Choice Hotels International

“While we, of course, know our franchisee base (economy, midscale and upper midscale) very well, IDeaS had limited experience in this area,” Lisi says. “And we needed their help with the revenue science. So, we worked together to use our knowledge and their science to create ChoiceMAX, a tool that was tailormade for our franchisees.”

Throughout its collaboration, Choice Hotels emphasized the need for their new system to be designed with three core components: automation, adaptation and highly advanced algorithms.

To begin with, ChoiceMAX leverages advanced pricing and inventory management algorithms as well as machine learning throughout the day to understand how to recalibrate those algorithms based on competitor and consumer reactions to the proposed rates.

“It’s as intuitive as you can get,” Lisi notes. “What we really wanted to do for our franchisees was simplify the type and number of revenue management decisions they had to make to just a few core decisions. Meanwhile, the system is doing all the price elasticity calculations for them, so they don’t have to do any of that heavy work.”

In fact, it has an optimization window of 365 days and reviews competitor websites multiple times per day to ensure Choice Hotels rates are competitive, while also allowing franchisees to set real-time alerts that can be customized to stay up-to-date on price changes or when competitors make adjustments.

“It acts in real time and responds to the trends of each of our brands,” Lisi adds. “So, this really allows them to understand what the booking trends are within their own market and then optimize pricing throughout the day.”

This functionality is only possible because of the investment Choice Hotels made in ChoiceEDGE, its global reservation system, which debuted in 2018 (and won a 2019 Hotel Visionary Award). ChoiceEDGE allows for streaming data to happen continuously throughout the systems in the cloud, meaning there is no historical infrastructure that limits, for example, the number of messages the brand is able to send in and out to its different distribution partners.

“Historically, hotels have been limited by the number of times they can message their distribution partners per day,” Lisi explains. “But now, because of ChoiceEDGE, our 5,000 hotels can send four messages a day, 365 days a year, to our distribution partners. We never could have done that without the investment we made in ChoiceEDGE.”

Built to Last

Ensuring that the platform could quickly adapt, regardless of what world event might happen, was especially important to Choice Hotels.

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Screenshot of ChoiceMax on a mobile phone

“We spent a lot of time on this first phase of ChoiceMAX to ensure we had a really strong platform so that a massive rebuild in the future won’t be necessary,” Lisi explains. “We’ve made sure it has the flexibility with the APIs and integrations that we’re building  to ensure we have the flexibility to be nimble in the marketplace and adapt to whatever our franchisees’ needs may be. And if we have different brands come in the future, with different customer sets, we can adapt the same system to those needs as well. Plus, with the rising demand for personalization, we now have the ability to layer in personalized segments into our algorithms and understand what the price elasticity is for different customer segments.”

Additionally, the company created ChoiceMAX to be a mobile-first, user-friendly platform. For instance, users can get real-time notifications on their phone. This is especially helpful as labor shortages continue to be a problem for the industry. So, if a hotelier is helping at the front desk, cleaning a room, or dealing with a guest complaint, she is still able to stay on top of booking patterns changing and respond to that immediately versus having to make time to sit at a desk and log into a system.

“As far as I know, ChoiceMAX is the only revenue management system out there that is both mobile-first and mobile friendly,” Lisi says. “In today’s environment, franchisees need that capability.”

An added benefit is its increased automation and integration with choiceADVANTAGE, the company’s PMS, and ChoiceEDGE, the company’s CRS.

“The increased automation allows for seamless distribution of rates and inventory across not just the Choice platform, but also all of our distribution partners,” Lisi added.

Five Star Reviews

Franchisees are loving it so far.

“The feedback we’re getting from franchisees is just remarkable,” Lisi adds. “They love how simple the tool is and tell us that it’s made their life so much easier during a time when stress levels are very high.  It’s great to know that we’ve simplified their lives and made some of their pain points disappear.”

But don’t take Lisi’s word for it. The brand shared with us some recent reviews from their franchisees.

“Moving to ChoiceMAX has been a real game changer. Having the ChoiceMAX app right on my phone makes managing my rates and inventory so much easier. We have especially busy days at the hotel and are always being pulled in multiple directions. Being able to monitor pricing and what’s happening in my market without having to be at my desk helps save me valuable time and lets me focus on my team and our guests. Plus, the same-day optimization function means my data stays current and reacts quickly to local changes which is what we need in this demand environment.” - Pete Patel, Owner, Econo Lodge Goose Creek and President of the Econo Lodge Franchisee Association

“Cambria Hotel Pittsburgh Downtown was a pilot property for ChoiceMAX. From the moment we began training, we knew that the power of the system was not only cutting edge, but a technological advantage over our competition. Within our first week of reporting, we took notice of the strategy of the system and allowed it to run its course. We gave control to ChoiceMAX, monitoring it closely and setting alerts that we felt were relevant to our city. By far, the best advantage to this new system is the capability of the application. I never imagined being able to change rates and watching it reflect in seconds. I can change rates on my cell phone from virtually anywhere, keeping the laptop at home!” - Mario Corrado, General Manager, Cambria Hotel Pittsburgh Downtown

 

Has your hotel brand done something amazing with technology in 2022? Then we want to hear from you! We'll be opening up the nomination period for our 2022 Hotel Visionary Awards after Labor Day, but you can always tell us about your amazing achievements ahead of time by emailing Michal Christine Escobar, Senior Editor - Hotels at mescobar @ ensembleiq.com!